EUR/USD Bearish Trade Idea - Detailed Analysis** IF you like my observation, please boost and follow for more content."
Timeframe: 1 Hour
Entry Price: 1.16177
Stop Loss (SL): 1.16521
Take Profit (TP): 1.15763
Market Overview:
Trend Context: The EUR/USD pair is currently in a clear downtrend as indicated by the price action making lower highs and lower lows.
Chart Setup: The chart shows a descending triangle pattern, which typically signals a continuation of the bearish trend, as the price struggles to break through the resistance at the upper boundary while consistently making lower lows.
Trade Rationale:
Descending Triangle Pattern:
The formation of a descending triangle indicates a strong bearish bias, where the sellers have been consistently defending the resistance level.
The price is making lower highs and has found support at the 1.16177 level, a key point where the downtrend has previously gained momentum.
A breakdown from this triangle often leads to a continuation of the downward movement, reinforcing the bearish outlook.
Entry Setup:
The entry point at 1.16177 is set below the support level, confirming that the price is likely to break through and continue downward.
A close below this level would provide confirmation for the short position, as the breakdown indicates further downward potential.
Stop Loss Placement:
The Stop Loss (SL) is set at 1.16521, just above the last significant swing high and the trendline of the triangle. This allows for some room in case of a false breakout while minimizing risk if the price reverses above this level.
Take Profit Target:
The Take Profit (TP) is set at 1.15763, where the previous support has been observed. This level represents a logical exit point, based on the measured move of the triangle pattern and the market's reaction at this support area.
Risk-to-Reward Ratio (RRR):
This setup offers a favorable risk-to-reward ratio, with a stop loss of approximately 45 pips and a take profit target of approximately 114 pips. This results in an RRR of about 1:2.5, which aligns with a solid risk management strategy for a favorable trade.
Technical Indicators:
Exponential Moving Averages (EMA):
The chart indicates the use of EMAs, which are still in a bearish alignment. The price is below both the 9-period and 20-period EMAs, suggesting that the overall trend is downward.
The EMA setup confirms the bearish momentum, reinforcing the rationale for the short position.
